The hadith collections are the most important source for the
Sunnah (example), i.e. the established
model of Muhammad's words and deeds, which Muslims should be following.

Sahih (true) hadiths: those accepted to be the most authentic.
Qudsi Hadiths: hadiths that record what Allah said.

Hadiths consist of two parts: chain of narrators
(isnad) and the text
(matn).
The earliest collection of hadiths dates from 1.5 to 2 centuries
after Muhammad's death.
al-Bukhari
collected over 600,000 reports, but kept only 7,397 as true.
Of the six important Muslim collections of hadiths, Bukhari and
Muslim are accepted as the most reliable. Their collections are
called Sahih al-Bukhari and Sahih Muslim respectively.

However, most hadith seem to have originated in the second century
rather than with Muhammad, as explained in Joseph Schacht's classical article
A Revaluation
of Islamic Traditions.

If a hadith report is not mutawatir (ie. universal, widespread,
accepted with concensus), "most scholars would say that one is free
to disregard it, though not necessarily without peril" (Lomax).
[Question: Now, of course, if disregard is perilous,
a person should
follow such hadiths. Yet there are so many different hadiths,
and if one is held accountable for such actions, what is the
criteria for right and wrong?]

Muhammad said: "The Sunna can dispense with the Qur'an, but not
the Qur'an with the Sunna".

Muslims also believed that the hadiths are also divinely inspired.
"The teachings of Islam are based primarily on the Quran and the
Hadiths, and as we shall presently see, both are based on divine
inspiration."
(Muhammad Hamidullah, Introduction to Islam, pg 23)

The hadith regulates the life of a Muslim. The Qur'an contains scant
details of many of the duties of the Muslim, and the hadith filled in
the gap by providing the details. For example, the
salat is described in detail in the hadith
but not in the Qur'an.

Not all Muslims believe in the hadiths, and Muslims have been
divided since the existence of these books. Shiites and Sunnis have
different collections of hadiths. Some believe them only when it
suits them. For example, they would accept passages in them that
would glorify Muhammad and his teachings but reject those that
discredit him.

Muslim scholars admit that many of the hadiths were fabricated.
For example, Goldhizer cites the Muslim
scholars Al-Ya'qubi, II, p. 311, Ibn al-Faqih al-Hamadani, p. 95, 3,
Ibn Maja, p. 102 concerning Abd al-Malik (716-794 A.D.), one of the
four great jurists of Islam, who was himself a major collector of
hadith:

When the Umayyad caliph 'Abd al-Malik
wished to stop the pilgrimages to Mecca
because he was worried lest his rival 'Abd
Allah b. Zubayr should force the Syrians
journeying to the holy places in Hijaz to pay
him homage, he had recourse to the
expedient of the doctrine of the vicarious hajj
to the Qubbat al-Sakhra in Jerusalem. He
decreed that obligatory circumambulation
(tawaf) could take place at the sacred place
in Jerusalem with the same validity as that
around the Ka'ba ordained in Islamic law. The
pious theologian al-Zuhri was given the task
of justifying this politically motivated reform of
religious life by making up and spreading a
saying traced back to the Prophet, according
to which there are three mosques to which
people may take pilgrimages: those in Mecca,
Medina, and Jerusalem. .. An addition which,
apparently, belonged to its original form but
was later neglected by leveling orthodoxy in
this and related sayings: 'and a prayer in the
Bayt al-Maqdis of Jerusalem is better than a
thousand prayers in other holy places,' i.e.
even Mecca or Medina. Later, too, 'Abd
al-Malik is quoted when the pilgrimage to
Jerusalem is to be equated with that to
Mecca...
(Ignaz Goldhizer, Muslim Studies (Muhammedanische Studien) vol. 2
London: George Allen & Unwin Ltd., 1971, p. 45)

Clearly, this politically motivated fabrication sought to find
authority in Muhammad, less than a century after Muhammad's
death, is significant. That the Muslims have little or no way to tell
true reports from fabrication makes dependence on them to govern life
a difficult one to justify.

``As disputes arose, one technique adopted by the usulis was to
question the validity or relative strength of the opposing group's
evidence. When the opponent rested his argument on a hadith, the
strength of his evidence could be challenged by the rough-and-ready
rule of counting hadith reports. The usuli would allege that a
greater number of reports, or transmitters for a particular report,
could be amassed in favour of his school's view. This technique
resulted in the clasification of hadith reports according to their
'spread' as : mutawatir (universally acknowledged),
mashur (widely attested), and
khabar al wahid (isolate).

More subtle methods of challenging evidence were emerging. One of
the most enduring was to be isnad criticism. By isnad (support)
is meant the list of guarantors which came to be demanded for all
statements as to what consitituted the Sunna. To ensure the soundness
of information conveyed, all scholars were required to list the names
of those persons responsible in each generation for the downward
transmission of every individual hadith.

From his knowledge of the magazi and sira sciences, which
dealt respectively with the campaigns and the biography of the Prophet
and his contemporaries, the scholar might note a discrepancy in the
opponent's argument, such as the transmission from a Companion on
some topic of a report which could not possibly be authentic, either
because the Companion had not been born, or had not yet been
converted to Islam, or had already died at the time of the
introduction of the particular ruling. The same technique served
also to determined 'correctness' as between conflicting views each
traced to a different verse of the Qur'an, for among the masses of
information presented in the magazi works were frequently to be found
also statements as to the date of revelation of this or that Qur'an
passage. Such data, asba al nuzul (the occassion of the revelation
of the verses), were eagerly collected.''
(John Burton, The Collection of the Qur'an, p.15)

Here is a Shi`ite's perspective of the hadith:

"Careful examination of the chains of transmission of the traditions
leaves one in doubt as to the extent of the deceitful additions and
false testimonies. Many conflicting traditions can be traced to one
companion or follower and many traditions, which are complete
fabrications, may be found amongst this body of narrations.

Thus reasons for the revelation of a particular verse, including
the abrogating and abrogated verses [in the Quran], do not seem to
accord with the actual order of the verses. No more than one or
two of the traditions are found to be acceptable when submitted
to such an examination.

Narrated Abu Huraira:
I said: "O Allah's Apostle! Who will be the luckiest person, who
will gain your intercession on the Day of Resurrection?" Allah's
Apostle said: O Abu Huraira! "I have thought that none will ask
me about it before you as I know your longing for the (learning
of) Hadiths. The luckiest person who will have my intercession on
the Day of Resurrection will be the one who said sincerely from
the bottom of his heart "None has the right to be worshipped but
Allah."

And 'Umar bin 'Abdul 'Aziz wrote to Abu Bakr bin Hazm, "Look for
the knowledge of Hadith and get it written, as I am afraid that
religious knowledge will vanish and the religious learned men
will pass away (die). Do not accept anything save the Hadiths of
the Prophet. Circulate knowledge and teach the ignorant, for
knowledge does not vanish except when it is kept secretly (to
oneself)."
(Sahih Bukhari 1.98)